The European Commission said today that it had approved the extension of an Irish bank guarantee system until June 30 next year.
The Commission said in a statement the guarantees, which are aimed at reassuring investors, were 'adequate means to remedy a serious disturbance in the Irish economy'.
It added that the extended measures are 'well targeted, proportionate and limited in time and scope' and are in line with its guidance on support measures for banks during the financial crisis.
The Eligible Liabilities Guarantee covers Irish retail, corporate and interbank deposits. It has been in existence for almost a year and replaced the blanket guarantee which was brought in in September 2008. It does not cover subordinated debt or asset covered securities.
The banks covered under the ELG scheme are Irish Life and Permanent, Bank of Ireland, AIB, ICS Building Society, Anglo Irish Bank, EBS Building Society, Irish Nationwide Building Society and Irish Nationwide Isle of Man.
The state has earned more than €1 billion by charging the banks for providing the guarantee.
It has to be reviewed and approved by the European Commission every six months, and was due to have expired on December 31.
Finance Minister Brian Lenihan said today that he welcomed the extension of the guarantee scheme and said it was a 'welcome development'.
He said the move will underpin the Government's efforts to restore the financial system and support the funding position of the participating institutions in the guarantee scheme.
'The Government is determined to rebuild consumer and investor confidence in our financial system which has an important role to play in ensuring businesses, and notably SMEs, can invest for growth,' the Minister added.
